TaxTMI 
TaxTMI 
2022 (8) TMI 559
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....scrutiny. 2.1 During the course of assessment proceedings, the Assessing Officer (AO) noted that the assessee had raised unsecured loans amounting to Rs. 2,11,37,381/- of which Rs. 1,12,37,381/- had been raised from M/s Aadi Krishna Agro Foods, Sunam and Rs. 99,00,000/- had been raised from M/s Erack Tech Engineering Ludhiana. The assessee was required to explain the same and it was the submission of the assessee that these credits pertained to the period 2003-04 and 200506 and since then they have been appearing in the balance sheets. It was further submitted that up to the assessment year 2012-13, these amounts were shown under 'sundry creditors', however, subsequently due to some mistake, these amounts were shown as 'unsecured loans'. The AO deputed the Inspector of Income Tax to conduct field inquiries and it was reported by the Inspector that no firm was existing at the address provided. Therefore, the AO issued a show case notice to the assessee proposing to add back the impugned amount of Rs. 2,11,37,181/- as income of the assessee. The assessee submitted another reply before the AO stating that these credits pertained to earlier years and due to some dispute with these p....
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.... condoned the delay by recording a finding that the assessment order was not served or deemed to have been served either at the address as per the PAN data base or at the address as appearing in return of income and, therefore, the assessee was prevented by a sufficient case in not filing the appeal in time. The Ld. Sr. DR vehemently argued that this observation of the Ld. CIT(A) was factually incorrect and as per records, the assessment order had been duly served on the assessee. The Ld. Sr. DR argued that the Ld. CIT(A) had erred on facts in condoning the delay and, therefore, the order of the Ld. CIT(A) was invalid in eyes of law and was liable to the set aside at the very threshold itself. 3.1 On merits, the Ld. Sr. DR relied on the observations and findings of the AO in this regard and submitted that since the assessee had himself admitted that he had no business activities with these parties any longer due to disputes and also that he did not have further information about the two parties, it was apparent that the assessee had raised fictitious liabilities and had introduced his own unaccounted money into the books account under the garb of unsecured loans. It was further ....
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....f the case. As far as ground No.2 challenging the condonation of delay by the Ld. CIT(A) is concerned, a perusal of the impugned order shows that the Ld. CIT(A) has given a categorical finding that the assessee was not served with the assessment order and as the same was not served or deemed to have been served or deemed to have been served at the address as per the PAN data based or at the address as appearing in the return of income. The Ld. CIT(A) went on to hold that, thus, due to non-service of the assessment order, the assessee was prevented by a reasonable cause in filing the appeal before the Ld. CIT(A). This categorical finding, although has been challenged by the Ld. Sr. DR during the course of proceedings before us, however, she could not bring any document or evidence on record to establish that these findings of the Ld. CIT(A) regarding non-service of assessment order were perverse. In fact, when the Bench inquired from the Ld. Sr. DR if the Department was willing to challenge findings of Ld. CIT(A) vis-à-vis the non-service of assessment order by filing an Affidavit on behalf of the Department in this regard, the Ld. Sr. DR replied in the negative. In such a si....
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.... section 41(1) of the Income Tax Act, 1961. The relevant extracts of the same are being reproduced here under: "Profits chargeable to tax. (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the firstmentioned person) and subsequently during any previous year - the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or... ...Explanation 1:- For the purposes of this subsection, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or ....
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....t that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the Income Tax Act. The objective behind this Section is simple, it is made to ensure that the assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year with reference to deduction allowed earlier in case of remission of such liability... xxx It is important to note that the said purchase amount had not been debited to the trading account or to the profit or loss account in any of the assessment years...Hence, we find no force in the argument of the Revenue that the case of the Respondent would fall under Section 41 (1) of the IT Act." 5.7 The Hon'ble Punjab & Haryana High Court in the case of CIT Vs. G.P International Ltd in ITA No. 618 of 2019 has held that since the assessee was showing the aforesaid....